SP Council Approves Sewer Utility

After a heated discussion among council members and the public, the Scotch Plains Township Council approved a sewer utility bill late Tuesday that will charge town residents based on their individual water usage.

Up until now, residents have been paying a sewer fee that was based on their property assessments and that showed up in their annual property taxes. Now, residents will see a separate bill arrive in their mailboxes, one that will bill them depending on how much water they use.

Mayor Nancy Malool said the move was made because it was the best option for keeping the township under the state’s tax levy cap of 4 percent this year. The Rahway Valley Sewer Authority hit the township with a 43 percent increase in sewer fees this year, increasing costs by $500,000.

The sewer bill, Malool said, will remove about $2.5 million from the budget to help bring it under the cap. Additional money needed is being generated by cutting the township’s operation expenses and by laying off nine municipal employees.

Malool said she’s confident that other options would have been much more costly to the town and not as beneficial in the long run. Those alternatives would have included additional layoffs or applying for a cap waiver, which would have required the town to use up its entire surplus first and accept pension deferrals. A full presentation of the township’s options for the budget and their implications can be viewed here.

"This is not something we had an option to do," Malool said. "We had no other choice."

The sewer utility proposal passed 3 -1 Tuesday night. Councilman Kevin Glover opposed, and Councilwoman Mary DePaola was not present.

All homeowners will pay a flat-rate fee of $250 the first year of the bill. Townhomes and condos will pay $180. After that, charges will depend on individual usage. Township-owned land, residences with septic systems and 100 percent-disabled veterans will be exempt from the fee.

Malool said the first bill should come around September.

The utility will also likely create the need to hire a part-time municipal employee to help with collecting the payments.

Even though Malool says this was the cheapest option for the township, residents shouldn’t expect to see a drop in their taxes this year. While municipal taxes will be lower this year, the cost of the sewer bill will eat up those savings, causing a net increase in taxes to homeowners of 12 points this year.

Residents should expect to pay approximately $155 more this year than last year, Malool said. Of that, $55 will be for increased costs to the township, and $100 will be the result of revenue shortfalls.

“One has to look at why the municipality finds itself in this position,” Malool said. “If the municipality hadn’t structured the budget the way it did in 2008, we might not be here. It’s primarily a loss of revenue that has caused this problem, not an increase in expenditures. We are partly in this position this year because we tried to keep taxes low last year.”

Residents in attendance Monday night expressed concern that the new sewer bill will not be tax-deductible, as it was under the property taxes.

“I regret that we haven’t had this before the public before,” Councilman Kevin Glover said in response to their concern. “We are making the most significant change in the town municipal budget, and I don’t think this has been properly vetted. People are going to see it as a tax, but the difference is that this fee won’t be tax deductible and comes at a time when a lot of people are hurting.”

Tensions in the room were also related to the township’s recent announcement that six full-time municipal employees and three part-time employees will be laid off as of June 22. Malool says those layoffs were necessary in addition to the sewer bill to save the township an additional $133,000.

“I don’t think this governing body has the desire to lay people off,” said Greg Fehrenbach, the town’s budget consultant. “If the utility is not created, there has to be other options, and there are very few other options other than personnel layoffs or reductions.”

Without the sewer utility, Fehrenbach said, the township might have to lay off as many as 50 municipal employees or cease to provide certain services.

“This budget sewer utility is an attempt to balance the budget,” he said. “This utility eliminates $500,000 of the problem. If it wasn’t created, we’d have a $500,000 problem that can only be dealt with beyond the layoffs that already exist.”

Fehrenbach said that the benefit of creating a sewer utility is that the monies collected under it are guaranteed to go toward paying for the township’s sewer fees.

“The advantage of the utility here is that it’s before everyone’s eyes, being handled by municipal management and staff, with no additional expenses,” he said. "We’re simply transferring a reasonable cost to a sewer utility and creating a rate structure that reasonably and fairly charges people for their use of that.”

Councilman Dominick Bratti echoed that statement.

“Even if there wasn’t economic pressure for us to do this, it’s still a good idea because it creates a fairer system of usage,” Bratti said. “This converts to a use-type fee. The more you use the service, the more you pay for the service.”

Other concerns were that by passing the sewer bill last night, it leaves little room for change in the budget, which is set for a public hearing on June 30 and to be adopted that same night.

“This council is in effect passing the 2009 budget tonight,” said Dick Samuel, president of the Scotch Plains Democratic Committee. “The options the council has at that time will be limited by tonight’s vote.”

But Fehrenbach said that even with the passage of the sewer bill, there “should still be room to make a myriad of changes to the budget.”

“I just hope we can do better over the next two weeks to save the jobs we’ve cut and keep people working,” Councilman Glover said in response.

The town council is holding its second and final meeting next Tuesday, June 16, to discuss the budget. It is open to the public. A public hearing and the adoption of the budget will take place June 30.